Economy

Battered China stocks off to worst start to second half since 2015

Battered China stocks off to worst start to second half since 2015”

Currently, the currency pair is trading at 6.6330 - up 0.24 percent on the day, but well below the high of 6.6390 seen on Friday. Beijing has said it would retaliate with tariffs on USA products.

Recent losses - the index is down almost 22 percent from a recent high in January - appear to have fueled concern among Chinese authorities.

The dollar fell 0.2 percent against a basket of six major currencies at 94.505 ahead of the U.S. Independence Day holiday, after notching up three consecutive months of gains.

China's yuan currency, on a downward spiral since mid-June, slipped past 6.7 per dollar in early trading on Tuesday for the first time since August 9, 2017.

At one point on Tuesday the yuan hit 6.7204 per dollar, its weakest level since early August, before sharply rebounding on reassuring remarks from Yi Gang, Governor of the People's Bank of China (PBOC).

"I detected increasing alarm over trade tensions and a lot of nervousness about a full blown trade war, which comes at a bad time for China where the economy is undergoing a downdraft at the same time the United States is seeing a sharp upturn", said Aninda Mitra, Singapore-based senior sovereign analyst at BNY Mellon Investment Management, who visited Shanghai last week.

After the morning drop, market participants suspected the central bank of intervening in the currency market to support the yuan.

On Wall Street, the Dow Jones Industrial Average rose 181.92 points, or 0.75 percent, to 24,356.74, the S&P 500 gained 23.39 points, or 0.86 percent, to 2,736.61 and the Nasdaq Composite added 83.75 points, or 1.12 percent, to 7,586.43. USA tariffs on $34 billion of Chinese products are expected to take effect on July 6, with China set to retaliate with duties of its own on the same value of American goods.

Officials in China, the epicenter of the worldwide trade row, have warned the United States that the tit-for-tat tariffs on each others' goods will ultimately prove detrimental for American businesses and jobs.

For the day, the index plummeted 409.54 points or 1.41 percent to finish at 28,545.57.

The mood was more cheerful in Europe where a pan-European equity index rose half a per cent, the euro firmed marginally and bond yields rose after German Chancellor Angela Merkel struck the deal with her Bavarian conservative coalition partners.

The Canadian dollar edged up to C$1.3113, its highest level in 2-1/2 weeks.

MSCI's broad index of shares in Asia Pacific excluding Japan edged down by 0.69 percent, but it remained above the nine-month lows it touched last week.

Shares of Mercedes-maker Daimler, BMW, Porsche and Volkswagen surged as much as 5 percent after reports of a USA offer to suspend tariff threats on EU-made cars if the bloc lifts duties on US vehicles.

US crude oil futures settled 0.3 percent higher at $74.14 a barrel after rising above the $75 mark for the first time in 3-1/2 years.



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